Skip to main content

Flourishing, but smaller? A look at where Best Buy might be in 10 years

Given everything that's happened, we've asked two retail experts: Where will Best Buy be in 10 years' time?
  • Author:
  • Updated:
    Original:

There's no doubt Best Buy is in a better place than it was four years ago, when it was riddled with internal turmoil and struggled to come up with a profitable business model.

Under the leadership of Hubert Joly, who took over in the summer of 2012 from departing founder Richard Schultze, the company has turned its fortunes around after a period in which some analysts were predicting its demise, particularly in the face of competition from Amazon.

But investment site The Motley Fool suggests recent improved profit margins are mostly the result of cost-cutting, as well as taking business that had been going to weaker or now-failed competitors.

The turnaround has not been a total one, and the past 12 months has seen the Richfield-based company underperform due to declines in smartphone sales, and a lack of new products from big companies like Apple.

Last month, Best Buy's financial outlook took a hit and its shares quickly fell afterward, as reported by CNBC.

But with one-time rival Radioshack filing for bankruptcy this past fall, and with Sears "bleeding cash" and struggling to survive, Best Buy looks set to be the last one standing out of the U.S.'s major electronics retailers.

Given everything that's happened, we've asked two retail experts: Where will Best Buy be in 10 years' time? (Note: We reached out to Best Buy as well, but a spokesperson said they couldn't comment on future performance.)

Still here, but smaller?

Neil Saunders, of retail research agency Conlumino, thinks Best Buy will flourish where RadioShack and Sears have failed/are failing because it is a "better business" with a more loyal customer base.

But, he says its real estate footprint – basically how big the stores are – is unsustainable. He expects the company to cut back in future years, particularly given that some of its categories like DVDs are likely to disappear in the next decade.

"Best Buy will probably still be around in 5-10 years, but it will likely be a smaller business with fewer stores, many of which will be smaller," he said. "It will be leaner and tighter in terms of operations and a far higher percentage of sales will be made online.

A decline in tablet and smartphone sales have hit short-term profits and though the retailer performing well with appliance sales, it's not enough to make up for it.

Going forward though, Saunders said Best Buy should focus on personal health and wellness tech – including wearable goods like FitBits – which he considers a "big area of growth."

"The selection needs to be better displayed and explained in stores, especially larger stores where it can get lost among all of the other things Best Buy sells," he says.

He also expects in the future it will make money from service-related spending – such as set-up, installation, warranties, training etc – which our next retail expert highlights is the absolute key to Best Buy's future success.

Is Geek Squad the key?

Paula Rosenblum, managing partner at Retail Systems Research, says that Best Buy's service departments makes it stand out not only from its physical rivals, but also from Amazon.

"Service is a differentiator, like their Geek Squad," she told GoMN. "I bought a TV from Amazon instead of from Best Buy and I regretted it."

"It seems to be that Best Buy is the last remaining one-stop shop for all things electronic," she adds. "And one thing we all have to remember is that there's always going to be people who need assistance and want to go to a store and bring in their electronics for help."

While they are important in the short-term for Best Buy, Rosenblum does not think that "phones are the future" for the company, and it instead should focus on the differentiator.

As well as service, this could also comprise "the internet of things," the concept of all appliances and gadgets in a home being connected by Wi-Fi.

"The internet of things is something they could really benefit from," she said.

Best Buy already sells smart appliances and is benefiting from the struggles of appliance rival Sears.

"They really lost their way for a while," Rosenblum said, "but I really have to give props to Hubert Joly who has done a good job restoring their name. I went into their store recently and was impressed by their service levels and their ability to find things."

Next Up

School dinners lunch

Minnesota to offer free school meals to 90,000 extra students

Gov. Tim Walz, who is facing re-election in November, announced the measure on Monday.

motorcycle

Minneapolis man dies from injuries days after motorcycle pileup

The 69-year-old died after four days at Regions Hospital.

Sebastion Wolbersen-O’Hara

Police: 15-year-old missing from home north of Twin Cities

Authorities say he may be headed to the metro.

Joseph_P._Kennedy,_Sr_optimized

Foundation, the building, the win

Identifying Value Plus Catalysts helps your financial strategy and foundation

boating minnesota lake

25-year-old Hopkins man drowns after falling off boat

The man reportedly fell from the boat while fishing with friends.

mayor frey city minneapolis live stream march 14 2022

What's in Mayor Jacob Frey's budget proposal?

Here's a breakdown of what the Minneapolis mayor is focusing on in 2023-24.

Low, Mimi Parker

Low cancels Europe shows due to Mimi Parker's cancer treatment

The Duluth band says the decision follows 'recent changes' in Parker's treatment.

Screen Shot 2022-08-15 at 11.09.39 AM

Wisconsin man admits to 1992 revenge killings 15 years after boyhood tragedy

The 52-year-old man is in custody 30 years after the 1992 double murder.

Related

Best Buy's CEO insists he's not leaving for the world's second-largest retailer

Will a worldwide retail giant try to poach Best Buy's heralded CEO?

Best Buy is talking about its 2015 Thanksgiving and Black Friday plans too

What Best Buy has in store for 2015 Thanksgiving and Black Friday.

Best Buy's new paper gift card is better for the environment

Best Buy is making the switch to paper gift cards. Here's why.

Best Buy landed some 'unicorn'-level rare video game Amiibo

If you know what Amiibo are, you know this is kind of a big deal.

Some of the best 2017 Cyber Monday deals from Target, Best Buy, Amazon and Walmart

Some of the highlights being offered by Target, Best Buy, Amazon and Walmart this year.

Best Buy confounds expectations with huge rise in sales

But it's not all good news for the Richfield retail giant.

Best Buy goes right at Amazon Prime Day with its own big discounts

Amazon's Prime Day starts Monday and runs through Tuesday – but Best Buy has its own deals lined up.